Utica Shale

Chesapeake Energy Reports Three Utica Shale Wells

Chesapeake Energy (CHK) latest Utica Shale results were released back in May 2012 and I neglected to post them here.  These three wells were all drilled and completed in Carroll County, Ohio:

Shaw 5H – 1,440 barrels of oil equivalent (BOE) per day, composed of 770 barrels of oil, 180 barrels of natural gas liquids and 2.9 million cubic feet of natural gas per day.

Burgett 8H – 1,210 BOE per day, composed of 720 barrels of oil, 140 barrels of natural gas liquids and 2.1 million cubic feet of natural gas per day.

Coniglio 6H – flow test of 1,125 BOE per day, composed of 290 barrels of oil and 5 million cubic feet of wet natural gas per day.

CONSOL Energy To Spend $50 million In Utica Shale In 2012

CONSOL Energy (CNX) approved a $1.7 billion capital budget for 2012 and plans to spend $50 million in the Utica Shale, up from only $3 million in 2011.  The funds will be used to drill 11 net wells during the year.  CONSOL Energy estimates that the company’s drilling in the Utica Shale through 2015 will be:

2012 – 11 net wells

2013 – 27 net wells

2014 – 33 net wells

2015 – 33 net wells

CONSOL Energy said that in 2012, all the Utica Shale wells will be drilled in the oil window or wet gas area of the play.  CONSOL Energy is involved in a joint venture with Hess Corporation (HES) in the Utica Shale.

Chesapeake Energy Reports Two Utica Shale Joint Ventures

Chesapeake Energy (CHK) announced two joint venture transactions involving the company’s properties in Ohio that are prospective for the Utica Shale.  The company expects to receive $3.4 billion in proceeds from the deals.

Transaction One

Chesapeake Energy reported selling a 25% interest in 650,000 net acres of leasehold in the wet gas area of the Utica Shale.  The company owns 570,000 net acres and EnerVest owns the other 80,000 net acres.  

Chesapeake Energy will receive $2.14 billion, with $640 million in cash and $1.5 billion as a drilling carry.  The company expects to utilize this drilling carry by the end of 2014. EnerVest will receive $300 million from the deal.

This joint venture deal is with an unidentified international major oil company and values the acreage at $15,000 per acre.  Chesapeake Energy will be the operator of the joint venture.

Transaction Two

Chesapeake Energy has created a new entity called CHK Utica, L.L.C and issued $500 million of perpetual preferred stock in this entity to EIG Global Energy Partners. Chesapeake Energy is planning to sell an additional $750 million of these shares to other investors.

CHK Utica, L.L.C is a subsidiary of the company and owns 700,000 net acres of Utica Shale leasehold in Eastern Ohio.  The perpetual preferred stock comes with a 7% distribution, paid out every quarter.  Other details on the preferred stock:

• Issuer retains an option to repurchase the shares prior to 10/31/2018 at a valuation equal to the greatest of a 10% IRR or a 1.4 return on investment.
• Holders of the shares also receive a 3% overriding royalty interest in the first 1,500 net Utica Shale wells drilled by CHK Utica, L.L.C.